Labels and Quotas: Give & take

New labelling requirements with regard to labels of origin, as well as an apparent about-turn with regard to China import quotas, are two new developments which will affect various sectors of the industry. While certain people are positive about the developments, there are many who believe that local business and brands will suffer the consequences. BEVAN FRANK takes a look at recent developments with regard to labels of origin and China import quotas in the quest to determine whether they are indeed a breath of fresh air

In 2006 the Government announced a new plan to curb the import of cheap Chinese goods in an effort to cushion clothing manufacturers. The controversial plan was met with resistance from big business, which said it would hurt consumers, and some retailers even planned to take government to the Constitutional Court.

However, in a recent about-turn, Trade and Industry Minister Mandisi Mpahlwa has been forced to ease these quota restrictions which were originally imposed to prop up the local clothing and textile sectors and protect them from cheaper Chinese imports.

The quotas have in some cases hurt the very manufacturers whom they were intended to benefit because manufacturers have been prevented from importing fabric not available locally. There has been a dismal effect on factories and hundreds of jobs have been threatened.

The International Trade Administration Commission (Itac) has said that the commission would consider written requests from importers to increase their quotas under special circumstances, notably where specific products were manufactured only in China or not manufactured locally.

This also applies to specialised sports gear. Itac acting commissioner, Itumeleng Masege, has said that the concession was recommended by the monitoring committee that was appointed to track the import restrictions and identify unintended negative consequences.

However, importers will only get the allowance if they show a commitment to help develop the local industry.

These measures would have to include enhancement of, or contribution to, technology and skills development, empowerment, local procurement and building of competitiveness of the local industry.

There are many who feel that the government’s latest move is paradoxical as it flies in the face of the objectives of the quotas in the first place (ie to give local manufacturing companies some breathing space).

A blow for local brands

According to Andrew Baxter, MD of Capestorm, the exemption for imports of international sports brands and branded clothing — such that they can import with impunity — in effect, goes out of its way to penalise SA brands by denying them equal access to the best sourcing opportunities.

"For example, the SA re-sellers of Nike or adidas or The North Face can source their products in China at best price, but a SA registered brand is not afforded the same opportunity to have items manufactured in China, since the import quotas restrict it from doing so," Baxter says.

"How in such instances, where the playing fields are so uneven, can the domestic brand possibly remain competitive? This is particularly so in relation to specialised goods that either cannot be manufactured locally, or for those products where the cost of production is significantly disparate."

Baxter suggests that we use this opportunity to coerce international brands to support local sourcing.

"After all, this is the intention. Furthermore, one has to consider that SA brands, irrespective of their sourcing policies, invest significantly more in the domestic market, pro rata, than their foreign counterparts, in terms of their investment in job creation through design, administration, logistics, head office and other infrastructural support — yet this is not factored into the job creation scorecard."

Playing fields more unlevel

According to a local manufacturer wishing to remain anonymous, people in the industry can choose to remain patriotically SA and hence uncompetitive by comparison to the international brands (but idealistically committed to the cause, which they fundamentally support), or they can sell their brand off to an international buyer and come back into the SA market as a foreign brand with the same advantage as those already outlined.

"On the one hand government says it wants to foster domestic creativity and innovation through the development of SA brands, and on the other hand it kicks these initiatives into touch by actively stifling competitiveness," says the source.

"Perhaps government can advise us what we should do: sell our IP or loose our jobs? Unless there is a common universal policy for all, the domestic manufacturing industry and SA brands will continue to haemorrhage"

Edcon logistics executive Martin Deall maintains that selective application of quota rules cannot be seen as a fair practice.

"There will, however, be minimal impact in the industry, provided there is good governance in the application of the exceptions granted and these should be made public knowledge to ensure transparency in the process," he says.

"Edcon has always maintained that quotas are bad for consumers, and will do little to save the industry unless the industry takes this small window of opportunity to make itself more competitive."

Labels to show Country of Origin

Various sectors are extremely happy about the new country of origin label regulations. Proudly South Africa has welcomed the implementation of Country of Origin Labelling, saying it will greatly assist consumers to distinguish between imported and locally made/Proudly South African merchandise and enable them to make informed decisions when they buy clothing, textiles, leather goods and footwear.

According to Deall the re-issue of the legislation was an indication that government now intends to more actively monitor compliance.

"The legislation will ultimately prevent import of any parcel lot or stock buys as these now have to be correctly re-labelled at point of origin and most sellers of these stock lots will be unwilling to do this as they are merely trying to sell off unwanted product at highly competitive prices," says Deall.

"This will affect mainly the informal sector traders who rely on this kind of sourcing for extreme low price to the poorest consumers. This product will no longer be allowed to be imported without correct labelling."

The Textile Federation is also smiling. "We welcome the introduction, finally, of the textile and apparel labelling legislation," says Brian Brink, Executive Director of the Textile Federation.

"It should provide the consumer with essential information so that informed purchasing decisions may be made and also facilitate the work of the customs department in combating transhipping and other fraudulent import activities."

Ronald Rink, MD of Puma SA, agrees. "I think it will make it more difficult for the informal/counterfeit operators to import products", he says.

Depend on monitoring

The effectiveness of the legislation amendments will depend on monitoring and strict controls. According to reliable industry sources, there are factories in KZN employing upwards of 400 people simply to manipulate labelling on contraband imports. Assuming it takes 20 seconds per garment, that can be a lot of units!

There is a school of thought that view the amendments with caution.

"It is definitely an important step towards administering imports, imposing relevant tariffs and informing consumers both about the fabric content and assembly origin of manufactured goods," says Baxter.

"However, I’m hard pressed to see how the new legislation will make a significant impact on the clothing industry in general. Consumers tend to vote with their wallets first and their sentiments second.

"Consumers have generally come to accept and indeed expect to see that most consumer goods are made in Asia. If there is no discernable quality difference, then price is the overriding factor — irrespective of origin.

"My recommendation is that government’s biggest opportunity rests in building a strong culture to support local brands and local innovation. Brands are the key to differentiation"

As far as the future goes, Deall maintains that the intent behind this legislation was to allow consumers to make an informed choice about country of origin when making a purchase of clothing.

"Our research indicates that country of origin is very low on the consumer priority list when making purchasing decisions — they are more concerned with price, quality, fabric, brand, styling, colour, fit and only then may they consider country of origin ... if at all."

June 2007

New country of origin label requirements

Importers and sellers of clothing, textiles, leather goods and footwear are now compelled to attach a label indicating their country of origin. This requirement stems from the provisions of the Merchandise Marks Act aimed at preventing the application of false trade descriptions to goods, and selling them as such

In December 2006 Trade and Industry Minister, Mandisi Mpahlwa, signed a new regulation in terms of the Merchandise Marks Act on country of origin labelling, which came into effect on 14 April 2007.

The new regulations are a result of an investigation conducted by the trade and industry department into the influx of imported goods into the country. According to the Department, in the past many goods were imported with misleading labels stating that the goods were from SA when in fact they were not. The aim of the regulation is to act as a guardian of consumer interests.

Retailers will, from now on, be required to display permanently and prominently a label with the country in which certain products — including textiles and garments — was produced or made; an indication where a SA textile manufacturer has used imported griege fabric to produce dyed, printed or finished fabric; and whether such fabric has been dyed, printed or finished in SA from imported fabric.

In addition, retailers will have to give an indication, where a locally manufactured product uses imported material, that the product was made in SA from imported material. Even goods that have been reconditioned, rebuilt or remade (whether in SA or elsewhere), will have to state on a label that they have been reconditioned, rebuilt or remade as the case may be.

The goods must also conform to South African Bureau of Standards (SABS) requirements for fibre content and care labelling.

According to the regulations if one wants to attach a label to a product which states that the product is made in SA, then the label itself must be made in SA.

It also follows that if the product has been wholly assembled in SA, it is not considered as made in SA, and can thus not have the local production label attached to it as the materials used would not have originated from SA.

This should be easy enough to determine with reference to present certificates of origin which accompany the bill of lading on imported goods.

Thus, in a nutshell, this is what is required:

Garments must display (permanently and prominently) a label indicating the country where the product was produced or made;

The label must indicate whether a SA textile manufacturer has used imported fabric to produce dyed, printed or finished fabric; and whether this fabric has been dyed, printed or finished in SA from imported fabric;

The label must indicate, where a locally manufactured product uses imported material, that the product was "made in SA from imported material

The label must stipulate whether the goods are reconditioned, rebuilt or remade and name of country of manufacture

The Department, in collaboration with the South African Revenue Service (SARS) and the SABS, will ensure enforcement of the regulations.

SARS can randomly detain consignments to conduct inspections. Failure to comply with this regulation could result in the goods being seized.

An offender, which could include a business, could find itself facing:

a fine of up to R5 000 per article to which the offence relates and / or 3 years imprisonment on a first conviction

R10 000 per item and / or 5 years imprisonment on a second conviction,

a fine of R5000 and/or imprisonment of 3 years could be levied for each article which contravenes the regulations.

September 2007

Recreational angling regulations

Which marine species may be fished — and where? A summary of the regulations governing recreational angling

The Department of Environmental Affairs and Tourism has published an information booklet for recreational anglers, containing handy information on the rules pertaining to Marine Conservation and Protected Areas; the regulations governing recreational angling, spearfishing, cast-netting, scuba diving and rock lobster fishing; the obtaining of fishing permits, the bag limits for specific species and other information of value to the ordinary angler. It is available from Marine and Coastal Management Fishery Control offices, the post office or downloaded from the website www.environment.gov.za.

Prohibited species

The following are species on the prohibited list, which means that no person may catch, land or be in possession of:

Basking shark

Brindle bass

Coelacanth

Great white shark

Natal wrasse

Pipefish & seahorses

Potato bass

Sawfishes Family

Seventy-four

Whale shark

Fishing permits

The law stipulates: A person may obtain a recreational fishing permit from an office authorised by the Minister, subject to the payment of a predetermined fee, to engage in one or more of the following types of recreational fishing: Angling, Spearfishing, Cast-netting and Marine Aquarium Fish.

Recreational fishing permits indicate which kind of fishing will be allowed. A recreational fishing permit entitles the holder to catch fish for his or her own use only and not for the purpose of selling or trading fish.

Limits

Other regulations that recreational anglers must be aware of are: all fish that are landed, except sharks, skates, rays and chimaeras, must have their heads and tails intact so that it can be established that it conforms to the minimum size before they are gutted. Fish caught in contravention of the permit conditions must be returned to the sea with as little injury as possible.

No person may land or be in possession of more than the species-specific bag limits on a given day. Species not mentioned in the bag limit lists have a bag limit of ten, but sharks, rays, skates or chimaeras have a bag limit of one and rockcods have a bag limit of five. There is an overall cumulative daily bag limit of ten, irrespective of the species caught.

Coaching links

Staying on the right side of the law

The past few years several laws and regulations have been passed that affect how and where fish may be caught and regulate access to certain coastal areas. Tackle traders may want to alert their customers — especially those new to angling — what is legal or not by keeping copies of the following pages on hand

The fact that a Richards Bay angler was fined R220 000 for catching an endangered brindle bass and not releasing it earlier this year, should act as a wake-up call to all anglers who are not aware of which species may, or may not, be fished.

R200 000 of the fine was suspended for four years, but the angler had to pay R20 000 to the Oceanographic Research Institute. The institute was asked to use the money to create more awareness about the brindle bass through the erection of an educational notice at uShaka Marine World.

The brindle bass is protected by legislation because of its low numbers. Several other fish species are, however, also considered to be critically endangered, endangered, vulnerable and protected. Your customers should be aware that it is illegal to catch these species without a permit from the Department of Environmental Affairs (national or provincial).

There are three new pieces of legislation that still have to be passed into law that your fishing customers should take note of.

Threatened and Protected Species Regulations

Minister of Environmental Affairs and Tourism, Marthinus Van Schalkwyk, announced the new Threatened and Protected Species Regulations on 20 February, 2007. After presentations by some Provincial MEC’s around challenges in implementing these regulations by 1 June 2007, the Minister has decided that these regulations will come into force on 1 February 2008. The Minister says no further postponement will be considered.

The regulations list the species that are critically endangered, endangered, vulnerable or protected; regulate activities like hunting and fishing of these species and stipulate how a permit for hunting and fishing activities must be obtained.

There has been some concern about the implementation of these regulations and how they will affect anglers. The prohibition on the catching, capturing or killing a listed specie by any means method or device could, for instance, be interpreted that an angler who inadvertently catches a listed specimen without a permit while fishing for another, legal specimen, may be prosecuted — even if he releases the listed fish, as the regulation also prohibits physical control over a listed specimen.

Morné Viljoen, an angler and attorney specializing in environmental law, argues that an angler that practices catch and release would still be contravening the law and has therefore requested that special provision must be made for the special circumstances affecting anglers. Otherwise, he argues, an angler will need to apply for all possible permits in case he hooks a protected specimen. (See The Angler and the Law - 24. www.fosaf.org.za).

For enquiries about the proposed regulations contact: Riaan Aucamp (the Minister’s spokesperson) on 083 778 9923 or Email: raucamp@deat.gov.za.

Integrated Coastal Management Bill

This bill was Gazetted in December 2006 and was open for public comment for 3 months. The aim of the bill is to adopt a new approach in managing the nation’s coastal resources and to promote social equity in granting access to coastal zones in order to make better use of coastal resources, whilst also protecting the natural environment.

It sets out the requirements for national, provincial and municipal coastal management plans. It determines how access — or not — may be obtained to coastal land (including by vehicles); how coastal land and the marine environment must be protected and managed and the boundaries of coastal zones.

The bill makes a distinction between Coastal public property (state land along the coast); Coastal protection zone (100 m wide in urban and 1000m wide in rural areas); Special management areas (managed by a knowledgeable person) and Coastal set-back lines (prohibiting building too close to the coast line and public access to private property).

The right of access, or not, to coastal zones — including by vehicle — and regulations on damaging of the coastal areas are relevant to anglers.

The Use of Water for Recreational Purposes (Draft regulations)

The proposed regulations refer to the use of water for recreational purposes and includes all activities, including the surface of water, for sport, tourism or leisure (including activities contributing to well-being and skills development), whether for personal or commercial purposes.

This would include all freshwater anglers, whether they fish on dams or next to rivers. It also makes provision for the protection of riparian areas and watercourses.

People who engage in high impact or commercial water use for recreational purposes (e.g. fishing lodges or resort operators) must apply for the approval of an operational plan that complies with environmental management standards set out in the Department of Water Affairs Guidelines on Integrated Water Resource Planning for Using Water for Recreational Purposes, of August 2005.

Access may only be gained to state-owned waterworks where an authorised access point does not exist, with written approval of the Minister. The Minister must also approve any commercial or recreational activities and facilities on government waterworks.

Vessels may only travel at no wake speed in designated zones.

Rules to remember

An annual permit for recreational fishing, cast-netting or spearfishing must be obtained at a post office or designated office for the catching of species not on the protected list. The permit for listed species must be obtained in addition to this annual fishing license that allows for catches within specified bag limits.

An angler may use a gaff to land a hooked fish, but may not use a club, stick spear or speargun.